Autumn: the season of winged ants

The famous fable of the cicada and the ant relates that, while the cicada rested, the ant put effort into accumulating food to face the winter. The moral of the fable has become common knowledge, and schools still teach children the importance of making an effort.

When the going gets tough, the tough get going.

This year, September’s arrival coincides with a temperature drop that anticipates the onset of autumn, unavoidably heading us toward winter. Unfortunately, this statement is not merely a weather forecast this year but an analysis of the economic situation: the energy crisis, inflation… In other words, an unavoidable economic winter is on the way. However, we are not here to spread panic but to give our community recommendations so that the cold and the storms do not catch us exposed.

The cicada and the ant fable is not just a fable to be taught to children but also a valuable financial lesson. The ant did not simply accumulate food but looked for the best place to store it. To be prepared for the immediate future, it is not enough to save compulsively. We must look for investments that revalue our assets, especially in the current inflationary scenario. Due to recent political and economic events, we are facing a bear market with a very uncertain future. So, how can we handle this situation?

The case of the winged ant

September brings the arrival of autumn and the reappearance (not always assured) of rains. This latter phenomenon brings a somewhat “exotic” visitor: winged ants. Many begin to take refuge from the first inclement weather when this insect leaves its lair.

It would be unimaginable for the fabled ant to have wings, wouldn’t it? If so, we would be facing an alternative story. And that is what Fellow Funders would like to propose to you given the current economic situation: an “alternative” fable and a somewhat “alternative” moral. Indeed, the current situation advises investing to be protected against the coming recession. However, given the market situation, we must evaluate other options outside the traditional bond and stock markets. The alternative investment comes in!

What is alternative investing? Fellow Funders has been involved in this activity for some time. However, it would be difficult for us to define it. Not for lack of expertise but because it is a broad concept that grows yearly with the emergence of new types of investments. It is easier to explain what it is not. Alternative assets are not cash, stocks, or bonds.

Real estate, paintings, almond trees, gold…

Although these assets tend to be less liquid, they offer considerable growth potential. They range from real estate, the most popular alternative investment mode, to more “exotic” assets such as paintings and sculptures. This article focuses on alternative assets that you should, at least, consider in the current economic climate.

Nowadays, the most popular and valued alternative asset for investors is real estate, as we previously mentioned. In a recent blog, we discussed the benefits of the real estate sector from an investor’s point of view, especially regarding house flipping. To this opportunity, we have to add another we also discussed last week: investing in farms for agricultural holdings.

Commodities are also an asset to be valued, especially to diversify our investment portfolio. They often move in the opposite direction to the market: when the market suffers, commodities soar. For this reason, many experts recommend investing, between 5% and 10% of our portfolio, in commodities (gold) to counterbalance the losses caused by other investments.

Invest in startups!

Lastly, we could not close our particular fable without private equity. Although this alternative was restricted to large investors in the past, we can invest part of our savings in company shares thanks to the emergence of equity crowdfunding. In this case, we advise looking for sectors with risks that are not correlated with the coming recession. 

Given that this fable claims to be alternative, there are alternative endings (assets). Although all of them are viable, we recommend advice before investing in them. Winter is coming, and what better than investing in alternative assets resistant to recessions? Let’s become winged ants this autumn!

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